October 02, 2006

Economics chutzpah award

Even though we still have a quarter of the year remaining, I think we can already select the 2006 winner of the Economics Chutzpah Award (Non-Political Division): Robert Wright, chair of NBC. From the online Hollywood Reporter(link via Biz of Showbiz):

In a speech Friday titled "A Time of Reckoning" before the U.S. Chamber of Commerce, Wright said the threat piracy poses to the country's economic security was nearly equivalent to the threat terrorism poses to the nation's physical security.

"Five years ago we learned, tragically, that our physical security is under attack," he told the audience at the chamber's symposium on counterfeiting and piracy. "Since then, we've been a nation at war, with immense resources mobilized to fight a difficult struggle against an elusive enemy. Today, I want to suggest that the second pillar, our economic security, is also being challenged."

Even a brief review of the relevant history should have persuaded Mr. Wright to be more cautious in predicting imminent Doom. Drawing on the work of economist Hal Varian, I note:

1. High speed photocopying was once supposed to be the death of the publishing industry.

2. Television was once thought to be the death of the movie industry.

3. Jack Valenti once testified before Congress that video cassettes would kill the movie industry.

4. Musicians once feared that records would be the end of live concerts.

5. Radio was once thought to be the death of the music industry.

6. Audio cassettes were once thought to be the death of the music industry.

And yes, there are reasonable arguments that today's threat to intellectual property rights is different. But history should still give one pause.

And I would also note that we should, once again, be thankful that blogging has not yet driven out of business all our diligent, skilled professional journalists and editors. Like the ones at the Hollywood Reporter who report that Mr. Wright alluded to a loss of tax revenue from piracy of 837 billion dollars. The report Mr. Wright referred to, readily available here, claims a loss of 837 million dollars.